Microsoft vs. EU, Day One: Tech, Lies, and Videotape

   Unable to secure a settlement before facing off with European antitrust regulators and competitors, Microsoft opened its defense this morning in a Brussels, Belgium, courtroom presided over by European Commission (EC) Hearing Officer Karen Williams. The packed hearings, held at the EC's Borschette building, are closed to the public, but many details are already emerging.
   Before that can happen, however, Microsoft has a day and a half to present its response to EU charges. Microsoft has already submitted its written response, and--according to sources--the company will spend the first 8 hours of its allotted time arguing that it hasn't broken EU antitrust laws. "We have a straightforward presentation that will help bring to the Commission some important points," a Microsoft spokesperson told reporters before entering the hearing. The company will also use a variety of multimedia presentations to back up its claims. EC regulators will then cross-examine various Microsoft representatives from Africa, Europe, and the Middle East. Late tomorrow, representatives from the Computer & Communications Industry Association (CCIA), a trade organization comprised of Microsoft competitors, as well as representatives from Sun Microsystems and RealNetworks, will take the stand. Microsoft will provide its final arguments on Friday.
   In the meantime, Microsoft representatives say that they still hope to draft a settlement with their EU foes. "Microsoft remains committed to finding a constructive resolution to the case that addresses any concerns of the Commission while preserving the company's ability to innovate and to improve its products to meet consumer needs," a Microsoft statement reads. Or, as Microsoft General Counsel Brad Smith put it more concisely, "Hope springs eternal."
   The most damaging evidence against Microsoft might be the cavalier attitude its CEO has about the company's monopoly power, as evidenced by a videotaped deposition in which Ballmer joked about the term. "We asked him--this is after Microsoft has undergone four investigations and one trial \[on\] two continents--if he has any understanding of the word monopoly," Michael Hausfeld, a lawyer who has brought class-action lawsuits against Microsoft in the United States, said. "He actually laughed and said, 'Yes, I play it with my children.' I don't think that's an indication of someone who takes his obligations seriously." Hausfeld said he will present the video clip tomorrow afternoon in the hearings.
   The stakes are high for Microsoft. The EC is considering requiring the software giant to remove Windows Media Player (WMP) from Windows and reveal more interoperability information about Windows Server, and the EC can assess fines as high as $3.2 billion. The EC's Williams will present her opinions and recommendations to EC Antitrust Chief Mario Monti at the conclusion of the hearings, and the EC will issue its final ruling in early 2004. Generally, the EC issues final rulings more quickly, but the EC is concerned that Microsoft will try to appeal on a technicality, so it's taking the time to ensure that its case is rock solid.

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